Ninth Circuit Sends FERC Back Another Crisis Refund Case

By Published On: August 31, 2007

In yet another legal blow to the way federal regulators handled energy crisis-era demands for refunds, the federal Ninth Circuit Court of Appeals August 24 ordered the Federal Energy Regulatory Commission to revisit some issues because the agency “failed to consider or examine the [then] new evidence showing intentional market manipulation in California” and the Pacific Northwest. The state attorney general stated the case could result in another $1.3 billion in refunds to taxpayers. The power generation industry is waiting, once again, to see what happens in the long run. The court and federal regulators have been trading trump cards over 2000-01 energy crisis refunds for the last few years (see sidebar). FERC makes the initial decisions and the Ninth Circuit often sends them back for a rehearing after granting appeals. Under former California Governor Gray Davis’ administration, the state claimed power companies and electricity traders owed citizens over $9 billion in refunds. According to FERC, there have been about $6 billion in settlements to date–some in currency, others in assets “No one is going to spend a nickel until FERC adjudicates the case upon remand,” stated Gary Ackerman, Western Power Trading Forum executive director. Federal regulators did not tip their hands. “We do not generally respond to court decisions,” noted FERC spokesperson Mary O’Driscoll. The complaint was brought by California utilities, the grid operator, the California Public Utilities Commission, and several Pacific Northwest utilities. The court remanded the case back to FERC to reconsider additional information–such as Enron’s trading details–and whether to apply it to potential refunds. The court said federal regulators “abused discretion in denying potential relief for transactions involving energy that was ultimately consumed in California.” FERC maintained that Californians shouldn’t get the refunds because the power was sent through Pacific Northwest utilities–although consumers in California ended up paying for it. Powerex, Sempra, TransAlta Energy, Coral Power and Trans-Canada are the primary targets for refunds.

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